AIRASIA (5099) : Air Asia Technical Analysis
Air Asia has received a lot of press lately as a company that would have
a lot to gain as oil price trades in the 50s. Personally, I think the
stock has a lot going for itself. The domestic low cost airline is a
mature industry with clear and predictable volumes compared to the
volatile demand Air Asia X is facing. If they have an under capacity
problem, it shouldn't be that severe and should easily be solved.
Finally, a weakening Ringgit does wonders for the tourist industry and
should help contribute to Air Asia's bottom line.
But I do have a caveat. The airline hardly pays a dividend. At roughly 1.5% it's not a lot to go on. So I wouldn't hold my breath on the company. Airlines are notoriously bad on returns to shareholders.
Technically speaking, two uptrend lines have been violated pretty hard, so there probably will be a lot of resistance. Maybe I'd prefer a buy lower at RM1.8 a share given the risk profile of this counter. The price appears to be muddling around at the moment.
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